THE EFFECT OF INVESTMENT DECISIONS ON FIRM PERFORMANCE OF SELECTED FIRMS LISTED ON THE NIGERIA STOCK EXCHANGE

Abstract

Due to the crucial roles that firms play in the socio-economic life of the country, various scholars have attempted to identify why the country continues to face the underperformance of many corporations despite the availability of knowledge and funds. The purpose of this study was to analyse the impact of investment decisions on the performance of 20 selected firms listed on the Nigerian Stock Exchange using the Pooled-Ordinary Least Square Method on secondary data - leverage, liquidity, and investing skills - from 2014 to 2019. The independent variables—Leverage, Liquidity, and Investment Decision—theoretically indicate predictors of investment decisions, whereas the dependent variable—Firm Performance—is represented by Return on Asset, which is a powerful indication of a firm's worth. The findings indicate that financial leverage has a positive influence on Return on Asset while there is a negative relationship between Return on Asset and investment decision and liquidity. There is also a strong and positive correlation between liquidity and investment decision (R =.096), as well as a positive correlation between financial leverage and liquidity (R =.144) but a negative correlation between leverage and investment (R =-.012). As a result, the study suggests that investment decisions be timely, relevant, and dynamic and that they generate economic activities that last a long period.